UPDATE NOV 2014: Square has just announced gift cards are available directly from Square. Visit this link to find out more: https://squareup.com/gift-cards

Square has proven itself to be the proverbial double-edged sword.

The entire purchasing experience is curated through the Square Wallet mobile app, which gives customers the ability to buy store gift cards from anywhere and saves store owners the hassle of having to buy custom designed gift cards. Theoretically, it’s a great system.

But it’s a huge drawback if customers don’t have Square Wallet installed on their smartphones. The Square register doesn't currently have a gift card “option” either. So are store owners hopeless with selling their own gift cards with Square?

There is an alternative.

You can bypass Square Wallet by simply inputting gift cards as part of your inventory.

When you do this, be cognizant of how you price the gift card. It’s complicated for two reasons:

1) Sales tax is automatically tacked onto all inventory in Square.

2) Discounts are accounted for before tax is applied to the purchase.

We’ve made a super simple guide to the two ways you can deal with gift cards in your inventory:

Option #1: {Preferred}

Simply add the sales tax upfront. To do this, price the gift card for its face value (a $25 gift card costs $25) and have the buyer of the gift card pay sales on it. When the gift card is redeemed, you can add the full face value to the discount.

Option #2:

Price the gift card at less than face value so that when sales tax is added, the final cost of the gift card is equal to its face value. When the gift card is redeemed, reimburse for the pre-sales tax price of the gift card. This effectively taxes all the items which were purchased by the gift card rather than the gift card itself.